It can get costly or ugly or both.
I think that the only right thing to do it is to just redo the entire ceiling.
otherwise you are looking at the small patches of drwall that even if installed
beautifully, patched and spackled and all that and painted over
they will have some univennes even micro one but
it will show every time a light will hit just so at certain time of the day
or with specific indoor light and you will be miserable every time you look
at this celing at it will definitely spoill the perfection.
It also can be an issue when selling the house as if I saw a ceiling
that has been patched and fixed, the first thing I would suspect
was not the recess light replacement but the water damage
and even if you told me it was lights, I still would be suspicous
so you can loose buyers down the line.
I would probably go with what others said, replace the recess with
more updated ones as you can tell the age as older ones are kind
fo more bulky and uglier then new ones, but when you do that
you need to keep the same openning as any modifications
will show in the celiing ifyou go smaller adn reduce the hole.
So having both, recess and putting Chandelier inside is an option.
Otherwise I would truly go with a new ceiling.
To get an estimate, just call few places or search internet
for cost of replacing ceiling for specific area in sq footage..
measure your room and calculate surface and then
see how much would cost to redo the ceiling for that area.
I would assume that it will go into thousannds..
My totally unsubstantiated guess would be based on how
much per hour a worker has to charge you and how many hours
the job will do.
When you replace ceiling you have a LOT of work:
you need to have someone and rip your old ceiling
and I assume just that for a room 10 by 10 ft would
take probably one day to do it right,
then your guy would need to collect and dispose the rubble,
then they need to go to home depot, buy a new sheetrock
and or drywall.. transport it to your house, bring it upstairs,
then install it, then tape it, then spachle it, then sand it
then pur primer on it then paint it..
you know what I mean?
Not to mention that if you live through it all all your house
will have a millimeter even white coat of dust that you
will be finding in tight places like cabinets and top of books
for years to come
If you wanted to patch just a holes then that would require
probably electrician to come first and remove them safely
and plug the electircity in the ceiling so you would not burn
your house by any short circuit.
Then you would need to have someone who is a master in plastering
come and put pieces of drywall into the holls, and then repeat the process
as above from that point.. tape, spachle, sand.. primer, paint.
and if you have many holes that will take a lot of gymnastic from
a guy just the same.
Sometimes it is cheaper to do over then fix.
Of course as a last resort you can always demolish the house
and start over